German businesses are already planning for a recession and winter energy shortages, but they are also dealing with a scarcity of another valuable commodity: rain.

Weeks of blazing temperatures and scarce rainfall this summer have emptied the water levels of the Rhine, the country’s commercial lifeblood, causing shipping delays and tripling freight rates.

A transport ministry official told a government press conference on Wednesday that “we do expect an intensification of the low water level” on the Rhine, but couldn’t tell when or whether vessels will be unable to pass along the river.

The Rhine, which flows from the Swiss Alps to the North Sea via Germany’s industrial heartlands, is a vital waterway for items ranging from wheat to chemicals to coal.

Economists believe that the disruption might reduce Germany’s overall economic growth by up to half a percentage point this year.

The Servia, a 135-metre (148-yard) barge transporting iron ore from Rotterdam to the Duisburg plant of German steelmaker Thyssenkrupp (TKAG.DE), can only load 30-40% of its capacity or risk going aground.

On a recent journey, the boat was packed with small mounds of iron ore and frequently hugged the groynes along the riverside where the water was deepest.

The Rhine was so shallow in certain places that other vessels were moored deep below the quays where people walked. Signs warning of dangerously high floods protruded from the riverbank, and rocks lay exposed.

“Normally you have more than two meters under the ship but now you only have 40 centimetres in some places,” said the Servia’s captain, Peter Claereboets to Reuters. “And then for us the challenge is to get past those points without touching, without damaging the ship.”

“Because of the low water levels, the sailing route gets narrower, and we actually start travelling like trains, in a convoy,” he explained.

Other boats, unable to navigate shallower seas, have ceased operations entirely.

The resulting bottlenecks are just another stumbling block for Europe’s largest economy, which is already dealing with high inflation, supply chain delays, and skyrocketing gas costs as a result of Russia’s invasion of Ukraine in February.

The price of a liquid tanker barge on the Rhine has soared to roughly 110 euros ($112) per tonne, up from around 20 euros in June. BASF (BASFn.DE) said last week that it could not rule out output reduction. 

Low Rhine water levels, according to credit rating agency Moody’s, will increase expenses for chemicals businesses, particularly those with production facilities on the upper Rhine, and may result in output curtailment.

Coal power plants, which are regaining popularity as an alternative to Russian gas sources, are facing supply constraints due to boats being unable to take on enough coal.

Uniper (UN01.DE), which sought a bailout from the German government in July after becoming an early casualty of the energy crisis, has subsequently warned of possible output cuts at two of its plants, which account for 4% of Germany’s coal-generated electricity capacity. 

To the south, Switzerland is releasing 245,000 cubic meters of oil reserves to compensate for supply constraints caused by low Rhine levels.

Source: Reuters


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